Evaluation of Environmental and Social Impacts and Benefits of Shortsea Shipping in Canada

The full report is available upon request only.

Please contact Domestic Shipping Policy at TC.DomesticShipping-Transportinterieur.TC@tc.gc.ca using the title of the report, "Evaluation of Environmental and Social Impacts and Benefits of Shortsea Shipping in Canada", to obtain your copy.

Executive Summary

The purpose of this study, commissioned by Transport Canada (TC), is to evaluate the environmental and social impacts of shortsea shipping in Canada and to compare the outcome with the rail and road modes. In this context, a model incorporating the best approaches for the assessment of environmental and social impacts was developed so as to compare the three transportation modes on an economic basis. The results of the modal comparison should be used with care, given the general and specific limitations of the model developed for the study.

Environmental and Social Impacts

The environmental impacts considered in this study are fuel consumption efficiency, criteria air contaminants (CAC), greenhouse gases (GHG) and other non-quantifiable environmental impacts, while the social costs considered are accidents, congestion and noise.

The fuel consumption efficiency of the marine, rail and road modes are considered in a context of energy efficiency. The fuel consumption of each mode is measured in litres.

The CAC (SOx, NOx, PM) and GHG (CO₂, CH₄, N₂O) emissions are calculated in grams per tonne of freight per kilometre of freight movement, in order to compare them between the three transportation modes. The economic values of the emissions are then calculated, in the case of CAC, by applying unit costs of air pollution by pollutant emitted by province, and, in the case of greenhouse gases, by applying a unit cost for one tonne of CO₂-equivalent.

Other environmental issues, such as operational water pollution, non-indigenous aquatic species, anti-fouling paint and waste management, are not incorporated in the model, given that no methodologies are proposed in the literature for their quantification. Therefore, these impacts are discussed qualitatively in the study.

Moreover, accident cost valuation is based on a methodology that estimates the unit costs of accidents for the three transportation modes. A Statistical Life Value as well as a major injury value are used to calculate the accident unit costs.

Congestion costs are also considered in the model, as time saving and congestion are significant types of social costs. Marginal public costs of highway use by trucks in terms of cents per vehicle - kilometre are used in the model. Given the absence of methodologies in the literature to evaluate congestion costs for the marine and rail modes, the study does not consider congestion costs for those two modes.

Finally, noise costs are considered in the model. Noise costs generally consist of costs for annoyance and health. Marginal costs per province, in terms of dollars per vehicle - kilometre, are used in the model. No noise costs are considered for the marine mode.

The Scenarios

The model used in the study is based on realistic transportation case studies on main Canadian seaways. The four scenarios considered are located on the Great Lakes, the St. Lawrence system, the East Coast and the West Coast.

Notes regarding distances:

• Distances presented are approximate.
• Sources: CN, Innovation Maritime and GENIVAR.

For each scenario, the transportation modes are compared on a 2008-dollar basis. Thus, the model allows for identification of the transportation mode having the lowest environmental and social costs. The results are presented in the following table.

Modelling results show that the shortsea shipping transportation mode has the lowest environmental and social costs for three of the four scenarios, while the rail mode has a slightly lower cost compared to the marine mode for the remaining scenarios.

Those results demonstrate that the marine mode seems to gain an advantage in terms of environmental and social costs when the total distance to cover is equal or lower than the distance to cover with the rail or road modes. In the case of the St. Lawrence system scenario, for which the rail mode has lower environmental and social costs, the distance to cover for the marine mode is about 50% higher than those to cover by the two other transportation modes.

Limitations of the Model

The model developed for this study has limitations that limit the scope of the results regarding modal comparison of environmental and social impacts and should be used with care. The following table summarizes the general and specific limitations. They can be considered as suggestions for improving the model.

General Limitations

1. The model assumes the tonnage to be shipped is equivalent to one trip with the chosen marine vessel. The shipping possibilities that can be studied with the model are limited to the weight capacity of the twelve types of vessels presented in the study.
2. The model examines routes between given port pairings. The whole transportation chain is not considered. Consequently, the model tends to favour shortsea shipping, as the overall impacts of all the components in the goods movement chain from origin to destination are not considered.
3. The model is making a comparison on a one-way trip basis. Return trips are not considered for any modes. This may be a disadvantage for railways or trucking companies, as it may be argued that these transportation modes may have more backhaul opportunities.
4. Choosing tonne-km as the transportation service measurement unit has limitation when trucking is considered, given that the vast majority of trucked shipments are volume constrained rather than weight constrained, while it is the opposite for train and ships. This introduces a bias against trucking performance in the mode comparison.

Specific Limitations

1. Energy efficiency: An update of CO₂e unit costs should be considered in a future version of the model considering that a Canadian Carbon market should be structured in the next few years.
2. Accidents: The marine mode enjoys an advantage over the other modes regarding accident costs. Given the impact this parameter has on the results from the model, a quantification of "property damage collisions" for the marine mode should be considered in a further study once this data has become available.
3. Congestion: Canadian congestion due to freight transportation must be further studied. Unit cost evaluation was studied in the last few years, but only in a passenger context. Unit costs considered in this model come from a US study. This is a limitation to the model given that these unit costs do not reflect the Canadian road transportation system. Moreover, the model assumes that all trucks will encounter some level of congestion in urban areas, whereas this might not be the case depending on the itinerary and traffic fluidity patterns. The model also assumes that there is no congestion for the marine and rail modes.
4. Noise: Gillen (2007) road noise estimates must be used with care. The cover note of the Gillen study indicates that the figures are an order of magnitude of costs of noise from transportation activities. The model also assumes that rail transportation effects can be calculated with the same unit costs as road transportation. This assumption is a limitation of the model. It comes from Gaudry et al. (2006) that states that the noise unit costs for heavy trucks and rail are equivalent.

Shortsea Shipping and Sustainable Development

The results of the study demonstrate the potential that shortsea shipping has in terms of helping the government of Canada reach its sustainable development objectives. The model developed for the study shows that the environmental and social costs of shortsea shipping are generally lower than the rail and road transportation modes, when a port-to-port comparison is considered.

The following recommendations are made regarding the fostering of the development of shortsea shipping activities in a context of sustainable development (SD). Three basic principles are generally applied when developing sustainable development strategies: developing knowledge, promoting responsible action and fostering commitment.

1. Developing knowledge

• The Government should foster knowledge development in support of better decisions, legislation and policies on sustainable development as well as to better inform stakeholders of its actions.

2. Promoting responsible actions

• The Government should enhance promotion of shortsea shipping, but not to the exclusion of railway and truck modes. Shortsea shipping is part of an integrated system.
• The Government should focus on a well-integrated intermodal transportation system by planning for the fluidity of goods' movement between modes and improving port facilities. SD strategies will in that context have to support competitive logistics systems.

3. Fostering commitments

• The Government's policies, regulations and legislation concerning environmental issues should consider the ongoing economic viability of the marine industry.
• The Government, in cooperation with industry representatives, should identify measures to encourage ship-owners to upgrade or renew their fleets.
• The Government should set clear and realistic SD targets.
• The Government should increase cooperation with Canadian Port Authorities to ensure their understanding and interests regarding SD issues.